QBTS Shows Strong Technical Momentum Amid Fundamental Concerns: A Cautious Outlook Ahead

Technical Analysis

D-Wave Quantum Inc. (QBTS) closed at $12.25 on May 16, 2025, up by 11.06%, reflecting strong bullish momentum. The stock is trading well above its 50-day ($7.91) and 200-day ($4.47) moving averages, indicating a robust uptrend. The 14-day RSI is 78, signaling overbought conditions which could lead to short-term pullbacks or consolidation. The MACD at 0.69 supports continued upward momentum, although the relatively high ATR of 9.16 suggests elevated volatility. Trading volume exceeded average volume by 73%, reinforcing the strength of the latest move. Support is identified at $11.18, with no clear resistance, implying potential room for upside continuation if momentum sustains. A stop-loss level near $11.89 may help mitigate downside risk.

For the next trading day (May 19), technical indicators suggest bullish continuation but caution is warranted given the overbought RSI. Over the coming week, if positive momentum remains, price may test the annual high of $13.44, barring any negative catalysts.

Fundamental Analysis

QBTS operates in the quantum computing sector, displaying strong revenue growth with a reported 509% increase recently, driving the stock’s 50% gain since late March. Despite this, earnings remain negative with a trailing twelve-month EPS of –$0.66 and a negative P/E of –19.96, indicating that the company is not yet profitable. The discounted cash flow (DCF) valuation model yields a negative intrinsic value (-$0.76), reflecting current cash flow deficits and capital-intensive operations typical of emerging technology firms.

Macroeconomic sentiment around quantum computing remains bullish, with QBTS positioned as a technological leader following its claim of quantum supremacy on a real-world problem. However, Q1 results showed a large one-off system sale heavily skewing revenue ($15M total sales with 84% from one sale) and a Q1 bookings slump from $18.3M to $1.6M, highlighting inconsistent revenue streams and execution risk. The company’s next earnings release on August 14, 2025, will be a critical event to assess sustainability.

The stock’s valuation remains speculative, reflecting growth expectations rather than current fundamentals. Analyst consensus from eight buys and no holds or sells reflects strong positive sentiment despite the intrinsic valuation challenges. The substantial volume and recent price gains are partially sentiment-driven due to sector excitement.

Intrinsic Value and Long-Term Investment Potential

The negative DCF and EPS indicate that QBTS is not generating positive free cash flows at present, positioning it as a high-risk, high-reward growth play rather than a value investment. Long-term upside depends on the company’s ability to convert quantum computing breakthroughs into steady revenue growth and eventual profitability. The early-stage nature of the technology and volatile financial metrics recommend a cautious approach for long-term investors seeking stability or income.

If ongoing innovation and commercial traction continue, QBTS could realize substantial intrinsic value in the future. However, the current disconnect between market price and intrinsic valuation implies that patience and risk tolerance are required.

Overall Evaluation

QBTS exhibits strong technical momentum and market enthusiasm driven by breakthrough news and significant revenue improvements. However, fundamental weaknesses, including ongoing losses, uneven bookings, and a negative intrinsic value assessment, suggest considerable execution risk and volatility ahead. The stock currently trades at multi-year highs but presents typical early-stage technology risk profiles.

Classification: Hold.

The stock’s impressive recent gains and sector-leading innovation justify maintaining exposure, but overbought technical signals and fundamental uncertainties advise against aggressive accumulation at current levels. Monitoring earnings results and booking trends over the next quarter is critical for reevaluating the potential for a more definitive buy or sell stance.